Cut Carbon Emissions Without A Carbon Tax, Command And Control, Or Wrecking the Economy: Reprint Of September 2019 Blog Post

Reprint of my September 23, 2019 blog post.

Monday, September 23, 2019

Updated: Let The Consumer Choose. Comment To WSJ, "How to Cut Emissions Without Wrecking the Economy"

Posted By Milton Recht

My published comment to The Wall Street Journal, Commentary, "How to Cut Emissions Without Wrecking the Economy: A proposal for carbon dividends, backed by the broadest climate coalition in American history" by Christopher Crane and Ted Halstead:

Global warming is a world-wide problem. The US has a competitive profit motive private sector that constantly reduces production costs using fewer resources and more efficient production processes. The result is reductions in energy use and carbon output and the US is producing more with less energy per unit. Over the last few years, the US has seen a decline in its total CO2 equivalent emissions. While the US has reduced its green house gas output, the rest of the world has not. Virtue signaling, like the Paris Accord, will not reduce emissions. A carbon tax goes to the government and is not a private sector efficiency incentive nor an incentive to realistic approaches, such as carbon capture, nuclear, hydropower and hydrothermal power. Taxes, even refunded carbon based, increase prices, reduce output and wages, create deadweight loss and increase unemployment. Instead of a tax, put a carbon use number, like calories and mpg, on a product and let the consumer choose.

Addendum
A reply I posted to a comment to my comment in the previous article:

A carbon tax creates inefficiency through the creation of a tax wedge. The price consumers pay, price plus carbon tax, is less than the amount the producer receives for the goods produced, the price without the carbon tax. The tax goes to the government and not the producer. The differential creates a space where inefficient producers can sell their goods at a price higher than similar goods prior to the carbon tax, if they have lower carbon taxes. The carbon tax amount will be decided by bureaucrats and not the marketplace leading to loopholes and market distortions. Non-existing clean power producers, windmill, etc., will have to build new plants and power storage facilities to meet demand. Constructing new clean power facilities will produce carbon emissions. The startup carbon tax may prohibit them, unless they are exempted or subsidized. Exemptions and subsidies will lead to non-taxed carbon emissions. Better to let the consumer choose based on producer's carbon use. Label it.